What Chance a “Real” Possibility?

Yesterday ABC aired a two hour special “Earth 2100,” a “worst case scenario” of global warning disaster:

The scenarios in Earth 2100 are not a prediction of what will happen but rather a warning about what might happen. They are based on the work of some of the world’s top scientists and experts. …  Though there is some disagreement about the specifics, there is widespread agreement among the 50-plus experts we spoke to in the course of our 18 months working on this show that if we do not change course in the near future, the collapse of our civilization is a real possibility.

Elsewhere they call it a “very real possibility.”  But after all that work, they can’t bring themselves to say just how likely this disaster would be, if we do not change course.  A median of the 50 experts’ probability estimates (of a scenario this bad or worse) would have been fine.  Many of us are willing to chance a one in a billion possibility, but not a one in ten possibility; so what exactly is a “real” or “very real” possibility?

The show tracks a fictional Lucy, born in 2009.   When the story reaches 2030, the narrator says:

So what else will normal in 2030? The temperature will be warmer, about one and a half degree Fahrenheit, enough to dramatically alter the planet’s weather and rainfall.  Canada and Siberia for example will be wetter and hotter.  But for much of the rest of the world, rain will be scarce.  So will its most basic need, water.  By 2030 two thirds of the world’s population will be under water stress.

Lucy says:

In San Diego, they were ahead of the game. In 2009 they had starting building huge desalination plants. It took 20 years and billions of dollars, but it worked. The massive plants on the ocean turned salt water into fresh, and the city’s water supply was restored.  400 miles inland though, they were running out, and no one had enough money to build a pipe that long.  … Three days after Tuscon’s taps ran dry they finally got relief … What happened there scared the whole country.  In San Diego, when the private companies who desalinated our water used Tuscon as an excuse, and jacked up our water prices, I decided enough was enough. I went to a rally. A man standing next to me saw me yelling and said “I’m glad you’re on our side.” To make a short story even shorter, we fell in love on this spot.  Two months later, Josh and I were married; a year later, our daughter Molly was born, and full of red hair.  And the desalination companies? They backed down; we had won.

Josh and I had friends who, like us, were determined to re-imagine the future.  We were all of us optimists.  Some worked on solar plants in the desert, others tinkered with super efficient cars …

Lucy is presented sympathetically, even heroically.  So it is striking that the story doesn’t note how wrong were her actions.  The story complains the world did too little to prepare, but for the one example shown of firms preparing in hope of profits, the story celebrates stealing those profits.  But firms who anticipated such theft would probably not invest in such preparations.

Why so oblivious?  The obvious explanation, I think, is that viewers know deep down that what really matters to youthful protesters is not policy consequences but mating opportunities, which Lucy realized in full.  And I suspect a similar reason is behind why no probability was offered.  The show isn’t about helping people make a reasoned calculation, but about getting a repented-at-church-and-feeling-much-better moral purity experience.  Knowing that you agonized about our future and reaffirmed your vows at the church of green, you can now mate freely with similar others, comfortingly confident that they really care, and are one of “us.”

Politics is not about policy, after all.

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  • Zac Gochenour

    Lucy: a real life Ayn Rand villain!

  • Jim Simons

    Robin, your last paragraph is spot on. The entire program just reeked of a strong presentism bias concerning the future. One of the people that frequently spoke was “Van Jones”, currently “the Special Advisor for Green Jobs, Enterprise and Innovation at the White House Council on Environmental Quality.” (http://en.wikipedia.org/wiki/Van_Jones) It was very slick and well produced, and the narrative they introduce alongside the standard fare of alarmists and experts was novel and I suspect had a much stronger persuasive effect on viewers than the standard newsmagazine fare everyone is inured to by now. This made me all the more skeptical, in addition to considering the track record of futurists and predictions of decades ahead.

  • http://t-a-w.blogspot.com/ Tomasz Wegrzanowski

    Was there a single case when you don’t take side of the oligopolies in conflict with regulators? You assume free market, efficient allocation, lack of externalities, symmetric price transmission etc. without much evidence, and even with significant evidence to the contrary.

    This economists’ paradise of deregulation is a very convenient place for oligopolies to be – privatizing profits, but loses are still implicitly insured by governments.

  • Peter Twieg

    Tomasz –

    “You assume free market, efficient allocation, lack of externalities, symmetric price transmission etc. without much evidence, and even with significant evidence to the contrary.”

    I don’t see any of those things assumed here. In fact, all I see assumed is a bias in favor of regime certainty – that you can’t expect private investors to undergo substantial sunk costs if you’re planning to dissipate their expectations of future returns through price controls. What happened in the case of this hypothetical desalinization plant in San Diego basically ensures that fewer desalinization plants are made at the margin in the future. Do you actually disagree that this poses a likely problem, or are you going to stick to attacking strawmen?

  • blink

    In common usage, it seems that saying something is a “very real possibility” actually implies a lower probability than simply saying something is “possible.” The speaker knows the probability is close enough to zero to expect others to write it off as negligible. So we get “an asteroid strike is a very real possibility” and “you have a very real chance of winning the lottery”. On the other hand, we say “it’s possible that it will rain” and not the pretentious-sounding “rain is a very real possibility”. The speaker is trying too hard, like a book that advertizes its author as a “Ph.D” (to borrow a common example of signaling and counter-signaling).

  • http://t-a-w.blogspot.com/ Tomasz Wegrzanowski

    Peter: You have this mental model of private entrepreneur taking brave risks on free market in hope of future return of investment, and government regulators’ stealing his legitimately obtained profits.

    The more typical situation (like with gasoline prices) is oligopolies randomly stumbling upon unexpected shock in supply or demand and milking it for every last dollar they can get. There’s little evidence for long term hypothetical disaster based planning of the kind you’re suggesting.

    To validate my model as opposed to your model, notice reliable pattern how [costs increases are passed onto consumer much faster than cost decreases](http://en.wikipedia.org/wiki/Asymmetric_price_transmission) – something that models based on free market assumptions cannot explain.

  • Peter Twieg

    “To validate my model as opposed to your model, notice reliable pattern how [costs increases are passed onto consumer much faster than cost decreases] – something that models based on free market assumptions cannot explain.”

    Maybe not your simplest neoclassical models, but I’m pretty sure one could come up with a plausible explanation for asymmetric price transmission based on search theory. But this point strikes me as orthogonal to the important one you’re making – that firms simply do not incorporate expectations about the future into their present decisions, and thus regime uncertainty is never a problem.

    I find this pretty absurd. Perhaps you could argue that this is a strawman of your point, but if you concede that firms do plan around the future to a significant effect, then you have to allow that the risks of future political opportunism would have marginal effects on their present behavior which are probably harmful to consumers.

  • http://t-a-w.blogspot.com/ Tomasz Wegrzanowski

    Peter: I’ll make a testable prediction – corporations plan vastly less for low probability high impact events than standard economic theory suggest they should, and the different chance of regulatory limits on surprise profits have negligible effects on this behaviour. There’s an obvious non-neoclassical explanation for it that managers in such corporations have very little incentives to prepare for such events, and plenty of incentive to ignore them.

    We have a good test case here – oil companies. Different countries have different track record with regulations, so estimated chances of taxing surprise profits were different. If your model is correct, behaviour of oil companies before the oil price shocks in different countries would be significantly different, and those in countries with more regulation would be much worse prepared for oil price increases than those in countries with less regulation. If my model is correct, correlation will be negligible.

    Considering importance of oil, there simply has to be some research about that, if not I will be greatly disappointed in economics for skipping this subject.

    Also, we’re both aware that while research in economics is much less strict than research in medicine or physics, so one could always nitpick about details of any study, I’m sure finding a strong correlation would make me increase my estimates that your model is correct. Do you feel the same way about research that finds weak or no correlation (or correlation going the other way)?

  • Michael Bishop

    I also love the fact that the reason they couldn’t get water further inland was that it was too expensive to build pipes.

  • mjgeddes

    As I what constitutes a ‘real possibility’, intuitively, for me, it’s any odds more likely than about 24-1 (1 in 25 chance, or 4%). These odds are based on my experience with gambling. From my experience, sports commentators are generally ‘surpirised’ when any event with a less than 4% chance happens (as established by betting odds) whereas anything greater than 4% is regarded as ‘a real chance’. So 4% seems to be a natural sort of threshold for human brains, and indeed I use this threshold as a ‘cut off’ in horse racing to decide which horses to study (any horse paying more than about $25 doesn’t get considered).

  • CannibalSmith

    A very real possibility is 1 in 20 or likelier. 🙂

  • Bellisaurius

    One of these days, I really want to think about chance and what is a good, even if arbitrary point, where to start regulating or deregulating things.

  • Grant

    Tomasz,

    As far as I can tell, everyone prepares too little for high-impact, low-probability events (e.g., neither regulators or managers prepared enough for the current banking crisis). I’m sure the moral hazard from potential bailouts probably increases this a bit (though I’m skeptical it really makes a significant difference, as bailouts themselves are low-probability and high-impact), but Robin has written on how this as a cognitive bias.

    While there may or may not be a lot of empirical studies on regiem uncertainty, the causation is undeniable. Investors will not invest in something if they believe its profits will be taken away. Of course this comes in degrees, and in most cases I think your claim that it isn’t that significant of an effect makes sense.

    Also as near as I can tell, the protesters in the ABC special were not protesting asymmetric price transmission, they were protesting high prices. To support a political process where popular opinion is allowed to change prices, you’d need to show that this popular opinion is better at setting prices than a market is. It isn’t enough that it may have been better in one specific instance. I don’t see anything wrong with collective consumer bargaining in any scenario, though I gather this isn’t that was going on in the show.

    But oil and fresh water seem to be rather different – the supply of one is fixed, while the others’ is not. As long as the desalinization plants were operating at peak capacity (and not shut down to restrict supply), more profits may be desirable to attract other entrepreneurs into the industry.

  • http://hanson.gmu.edu Robin Hanson

    So some (mjgeddes, Cannibal) think “real” possiblities is > 4-5%, while others (blink) think it less than just plain “possible.”

    Tomasz, the story explicitly postulated firms taking long term bets based on what turned out to be accurate estimates of supply shortages, and said it is was high prices that irked protesters. You might complain the story is unrealistic, but I only said that Lucy was wrong given the story as written.

  • http://transhumangoodness.blogspot.com/ Roko

    The obvious explanation, I think, is that viewers know deep down that what really matters to youthful protesters is not policy consequences but mating opportunities, which Lucy realized in full. And I suspect a similar reason is behind why no probability was offered. The show isn’t about helping people make a reasoned calculation, but about getting a repented-at-church-and-feeling-much-better moral purity experience. Knowing that you agonized about our future and reaffirmed your vows at the church of green, you can now mate freely with similar others, comfortingly confident that they really care, and are one of “us.”

    – Robin, sometimes I am simply in awe of your Socratic ability to point out the irrationality and lack of self awareness that plagues our world. This is one of those times.

    Absolutely top quality post.

    Can I mate with you now? ;-0

  • Doug S.
  • Sean

    Does anyone offer insurance against acts of law? This could motivate the desalination plant even in face of stolen profits.

  • fenn

    In Our Final Hour, didn’t Rees cite some poll of scientists who put the probability of human extinction by 2100 at 50% ?

    Anyone know of similar estimates?

  • antrastan

    Robin Hanson jumps the shark!

  • http://liberalvichy.blogspot.com/ Vichy

    Why so oblivious? The obvious explanation, I think, is that viewers know deep down that what really matters to youthful protesters is not policy consequences but mating opportunities, which Lucy realized in full. And I suspect a similar reason is behind why no probability was offered. The show isn’t about helping people make a reasoned calculation, but about getting a repented-at-church-and-feeling-much-better moral purity experience.

    Makes me glad I’m not interested in mating opportunities or being moral.

  • kevin

    @Tomasz: Do you really doubt that instituting price controls on desalinated water ultimately leads to fewer people entering the desalination market?

    If so, here is Paul Krugman on rent control:

    http://www.pkarchive.org/column/6700.html

  • Floccina

    The obvious explanation, I think, is that viewers know deep down that what really matters to youthful protesters is not policy consequences but mating opportunities, which Lucy realized in full.

    And churches are great places to find reliable mates.

  • George Weinberg

    Do you really doubt that instituting price controls on desalinated water ultimately leads to fewer people entering the desalination market?

    It’s worse than that. The possibility of price controls leads to fewer people entering the desalination market. From the point of view of somebody living in 2030, it makes perfect sense to steal the plants, since after all they are already built. From the point of view of somebody living in 2015, it makes no sense to invest in building the plants. If the demand for water never materializes, you will lose out. If demand for water becomes extreme, you will still only be allowed to make “ordinary” profits.

  • Kebko

    Tomasz, it’s interesting that your discussion of the oil “oligopoly” doesn’t include the 20 years of sub-par returns they experienced before the shock. If you take a volatile industry & ignore all the down-times, you’re bound to come up with a conspiratorial view.

    As far as the show goes, I think it is telling that the narrator says,”In San Diego, they were ahead of the game. In 2009 they had starting building huge desalination plants…”
    I don’t think the authors or target audience of this script have any notion of markets addressing long term needs. I think the implication is that “San Diego” put together a plan, and in this non-market worldview, corporations are simply parasites on the plan, buying their way into lucrative contracts which they use to rob the populace.
    I just don’t think the believers watching this show have a single neuron devoted to decentralized market processes that might lead to this sort of development. It’s not so much that they would disagree with the idea of how a market would work here, they just have a worldview that allows them to avoid thinking about it.

  • Kebko

    I think that is one of the biases underlying the whole movement. It doesn’t really matter what the odds are, or specifically what the dangers are of global warming. The fact that we don’t have a plan is downright terrifying. Lacking a plan, to focus on worst case scenarios just makes sense.

  • ryanglinski

    A median of the 50 experts’ probability estimates (of a scenario this bad or worse) would have been fine. Many of us are willing to chance a one in a billion possibility, but not a one in ten possibility; so what exactly is a “real” or “very real” possibility?

    Is there any epidemiology to show that a median of expert opinions accurately predicts scientific truths? That’s probably not clear. A median of expert opinions will predict the outcome of basketball games pretty well. But what about questions at the highly uncertain end of science? “When will the next Earthquake occur?” “How long until an asteroid of X size impacts the Earth?” “What will be the long term relationship between temperature, humidity and precipitation if X tons of carbon are emitted?”

    I can’t see a reason to care what the experts say about the last question unless there’s some epidemiology from similar issues to show that the median opinion is somehow predictive.

  • mitchell porter

    Robin: “The story complains the world did too little to prepare, but for the one example shown of firms preparing in hope of profits, the story celebrates stealing those profits… The obvious explanation, I think, is that viewers know deep down that what really matters to youthful protesters is not policy consequences but mating opportunities…”

    Um, I think the obvious explanation is that the water companies of San Diego 2030 are portrayed as thugs! – jacking up the water price because the nearby situation in Tucson gives them a chance to do so.

    To have a fictional narrative adopt an approving and celebratory tone regarding the defeat of its villains is a dog-bites-man sort of story. It does not require special explanation.

    As for “what really matters to youthful protesters”… given that mental and physical vigor are generally considered attractive attributes, it would seem that if young people do anything requiring unusual effort, and happen to form romantic attachments along the way, a mating-mind theorist will be able to say “aha! it was really about the pursuit of mating opportunities”.

    • http://hanson.gmu.edu Robin Hanson

      It would have made sense to have a villain in the story, but that should have been an agent who violated the key moral of the story, which is that we need to prepare for and prevent global warming. The strange thing is to pick a villain who did the right thing. When the whole nation gets afraid about water supplies because Tuscon ran out of water, that is a natural increase in demand, which by supply and demand should raise prices, which is the right thing to have happen.

      • http://yudkowsky.net/ Eliezer Yudkowsky

        To be more specific, the water companies made advance investments in anticipation of the price going up later. This advance investment benefits the nation when the disaster actually occurs; it means people get to drink, instead of being thirsty. If they can’t raise prices, they have no incentive to invest in advance against the shortage, and the nation goes thirsty.

        I really wonder what the fundamental bar is to seeing the obvious – what is this basic Pons Asinorum of economic literacy. I guess our hunter-gatherer intuitions say something along the lines of “You should prepare for the disaster in advance, but then freely share some of your hoard” with the benefit coming by way of status gains, everyone being impressed by your wisdom, more mating opportunities, etcetera. I’ll bet that if one town had prepared well, and shared most of the extra water, but still kept enough for themselves for their residents to take luxurious baths, that would be “allowed”… A lot of economic illiteracy seems to revolve around the idea of money in particular as dirty, quantitative profit as something much more disgusting than other kinds of benefits, monetary inegalitarianism (in excess of your own level) as especially bad inegalitarianism, and in times of (hypothetical) moral stress all these effects increase.

      • mitchell porter

        Robin, Eliezer – If this were a real event, all sorts of complications might be present. A price hike meant to produce capital for investment might be scuttled by a populist conspiracy theory. Or a venal monopoly might opportunistically extract more revenue from its captive consumer base, with events providing a pretext. But in the transcript provided we have only Lucy’s voice, telling us that the water companies increased prices using Tucson “as an excuse”. There’s nothing there about investment, or even about increased demand, and the interpretive interpolation which supposes that Lucy is wrong and the companies were acting reasonably is introducing a whole subplot for which there is no textual evidence.

        Beyond the narrow question of how to read this particular piece of fiction objectively, I see two further issues: (1) is its image of the world true to reality in this regard, and (2) when is it truly the right course of action to raise prices. And I would think the answers are (1) yes, this sort of thing happens, and (2) not always, even when you could get away with it.

  • Hank

    If the last paragraph is supposed to be glib, I guess I understand what they mean by an economist’s sense of humor. If it isn’t, well then I simply despair.

    As for:

    You might complain the story is unrealistic, but I only said that Lucy was wrong given the story as written.

    If this makes sense, then you should have held the trajectory of the whole program as accurate, which you don’t. If you think the premise to the story is stupid, which it is, don’t hold to it and pretend like you’re offering a real analysis of investment in desalinization.

    Unless you like spending your time explaining to children that Santa Claus doesn’t exist because he lacks incentives.

  • Hal Finney

    It’s amazing to me that these writers, presumably unconsciously, followed Robin’s script so closely in terms of the real purpose of our holding political views. Many readers have been offended by and resistant to his claim that our deeply and seemingly sincerely held political beliefs are mere posturing, mechanisms to signal group loyalty and competitive fitness, ultimately aimed at success in the mating game. And here in this show we find this normally hidden effect laid out openly, manifest for all to see.

    I can’t help wondering if the writers really did tap unconsciously into a deep well of hidden knowledge about human emotions, or whether a more cynical and manipulative dynamic was at work. It’s such a perfect combination of bad policy and good sex. I wonder if this trick of successful emotional manipulation is a widely taught element of the writer’s craft: that for a character to be sympathetic, if they are involved in protests, they have to be successful at romance as a result.

    • http://yudkowsky.net/ Eliezer Yudkowsky

      (I’ve read a few dozen books about writing fiction and that advice isn’t in any of them.)

    • http://meteuphoric.blogspot.com Katja Grace

      Writers hardly need plot consciously! This sort of manipulation doesn’t need teaching – the worst authors know that romance is what should happen to the good guys in the interesting foreground of a story. And for people who haven’t thought about it a second’s affect confirms that a corporation selling water is a fine bad guy. Who thinks of nit-picking whether the policy is inefficient except the kinds of geeks who check whether the technological background to sci-fi or the historical accuracy of period dramas is realistic?

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  • andrew c

    So do you have a number for the probability of C02 induced warming leading the collapse of civilisation? Can you sketch the calculation by which you would arrive at a believable estimate?

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